Operations Management And Service Businesses Accounting Essay

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Business means involvement of different activities to generate profit. To achieve the utmost goal of business, business depends on several things, Such as- Operations, Information, finance etc. Operations management is to improve the overall procedure of the business. Operations manager are the development person, realistic hard nose people who arrange the procedure to make the work done. (Russell & Taylor: 2006)

Modern world are run by information. The accuracy of the information confirms the accurate decision of business. (Bee, F. & Bee,R: 2005). Quantitative analysis and mathematical arrangement can establish the logical framework to make a quantifiable decision.

1.1: Understand the role of operations within businesses

The role of management in managing business is inevitable. Operations management is a key part of this management which deals with organizing, communicating, planning, controlling, establishing, scheduling a production process that ensures a better process which leads better productivity. (Russell & Taylor: 2006). Castle Nursing home Plc. is a chain residence of over 200 centers. So the operational activities of this group are versatile and have a greater role to play to regain the reputation of this nursing home.

1.1.1 Framework for analyzing operations management within businesses:

Operations management ensures the effectiveness and efficiency of a process that are based on the strategy of the business. Operations management is called as transformation process. (Slack, N. et al. (2007). In this transformation process, there must have an Input, Transformation progress and output. The whole process is described as system. (Russell & Taylor: 2006). An operation manager always looks upon the rate of output comparing with the input, the efficiency of the process, the rate of productivity. Operations managers deals with materials, labor, overhead, in one sense overall management of the production process.

1.1.2 Operations management and service businesses:

In modern economy, service industry is playing a better role than the manufacturing, eventually service business is the major shareholder of total economy. The role of operations management in service industry is more versatile, where products are bundled with services and services are provided with facilities. (Russell & Taylor: 2006).

The role of operations manager in an old nursing home like Castle Nursing home Plc., can play a greater role in continuous quality improvement, evaluate methods and consider satisfying the customer, customizing staffs work procedure, consolidation procedure, liaison with local hospital, cleaning services etc.

1.2: Strategic importance of meeting operational performance targets:

Every business has a very certain objectives to attain. Operational performance measures indicate the real scenario of an organization and it also shows the impediments to meet the objective. Every self-sustaining organization follows the performance indicators, but it varies from industry to industry.

1.2.1 Identify the links between strategy and operational performance targets:

Operational performance targets work as a signal for a company. Operations performance is tended to query the market requirements and supports to satisfy the market. Performance operations are tested with five performance objectives:




flexibility and

Cost. (Slack, N. et al. (2007).

A better strategy depends on the formulation and execution of the strategy. Operations performance target helps to identify, measure, analyze report and reschedule the work process to execute the strategy properly.

1.2.2. Conflict between different performance targets

Conflict between the different performance target starts because of:






Individual role, personal values that establishes from different arena, unpredictable business mobility also a major reason for conflict arises.

1.2.3 Assess the role of strategic operations management:

Operations management shows the path of a successful organizational presentation. That can be achieved by supervision in overall process of the organization starting from material to labor to overhead. It helps out to supervise all the components from input to work in progress and to the last of finished goods. Operations management of an organization helps to gain competitive achievement.

1.3: performance evaluation in business:

Being successful every organization needs to assess the performance of a business from both a financial and a nonfinancial viewpoint. It should be established from operational and strategic aspects.

1.3.1 Range of techniques used to evaluate performance:

To evaluate the business performance a business mainly looks at:

Sales Analysis

Variance Analysis

SWOT Analysis


1.3.2: Role of Key Performance Indicators (KPI's) in operations management

A key performance indicator helps a business to think about business and to measure the progress which helps to achieve critical success factors. KPI is quantifiable and can be expressed as both financial and non-financial term. The subject matter of KPI varies from business to business.

KPI provides the road map to determine the overall performance of a business. It provides a real scenario of the all level of an organization such as - individuals, units, products etc.

KPI are defined on the basis of target and it develops the accountability and tracks the overall activities of the business. The proper controlling procedures are lies upon overall strategy, defining and tracking the KPI.

1.4 Range of quality improvement techniques on competitive advantage:

1.4.1 Concept of the value chain as a means to identify competitive advantage:

Michael Porter (1985) depicts the idea of value chain. He describes the value chain as the internal activities that a company performs "to design, produce, market, deliver and support its product."

Firms use the value chain approach to better understand the overall configurations to yield the greatest competitive advantage. (Shank and Govindarajan.:1989)

Value chain works on the basis of three defined analysis:

Internal cost analysis.

Internal differentiation analysis

Vertical linkage analysis.

Those types of analysis are not exclusive. Organizations start it from the internal operations and then widespread gradually.

1.4.2 Apply quality improvement techniques to managing operations:

Quality improvements techniques are treated as one of the main way to deal managing operations.

Quality Improvement described as Quality Control which is a transformation of a progression.

Quality Control is a simultaneous process to up keep the overall process involved in a production process.

Quality declaration is the proceedings to acknowledge the viability of a product or a service.

1.4.3 Assess the role of standard setting bodies in quality improvement:

Standards setting organization (SSO) ensures the quality of the overall activities of the organization. The roles of standardization are widespread both in scope and form, depending on the purpose behind the standard and the type of product. Standard setters' tries to make sure that the overall standards, safety, the impact on health are properly assured.

There are SSOs with an international reach, such as the International Organization for Standardization (ISO) or the International Electro technical Commission (IEC) that are governed by national SSOs. Most countries have national SSOs, such as the American National Standards Institute (ANSI). (www. wikipedia.com)

2.1: The role of information in strategic decision-making:

2.1.1 Evaluate models of strategic information systems planning:

Strategic information systems planning (SISP) can be said as a portfolio of IT based application that help any entity in executing its operational plan and leads to achieve the business strategy. SISP is an important tool for helping executives who deals with information and top executive to make their decision considering overall perspectives.

. Seegars, Grover and Teng have recognized six magnitudes that define an outstanding SISP procedure;




Top-down flow

Broad participation

High consistency

2.1.2 Strategies to align information systems with business plans:

The greater emerge of information technology offers different services to business that possibly helps the business procedure. Aligning information systems with business plans in this modern business is a common phenomenon. Consequently, companies are inevitably taking steps to align their business strategies with their information strategies (Kwei, 1998). A nursing home like Castle is involved with variety of work, aligning IT in the business plan can ensure the proper management of their procedure. An innovative business strategy is more effective when it has a proper align with the information systems.

2.2: Understand how information systems support the use of information, as a resource:

2.2.1.Evaluate the tools used in strategic planning:

Here we discuss about the tools used in strategic planning:

SWOT analysis

Balanced Scorecards

Scenario planning

PEST analysis (Political, Economic, Social, and Technological)

STEER analysis (Socio-cultural, Technological, Economic, Ecological, and Regulatory factors)

EPISTEL (Environment, Political, Informatic, Social, Technological, Economic and Legal).ATM Approach (Antecedent Conditions, Target Strategies, Measure Progress and Impact). www.wikipedia.com

2.2.2. Demonstrate how information-based services contribute to business functions:

Businesses are dealt from several unit of one organization. Somehow every unit relies on some sort of information that contributes the business function. Such as-

Marketing information systems provide information that helps out to make decision concerning promotion of a product or services.

The financial information provides all sort of financial activities database.

A human resource information system (HRIS) provides that information that scrutinize, organize the human resources policy and helps top management to execute the HR policy

2.3: Understand the rationale for quantitative approaches and techniques in decision-making

2.3.1 Evaluate quantitative approaches to decision-making:

Management decision making in today's world mostly depends on quantitative techniques and mathematical affiliation. Quantitative approaches allow management to have the best reliable decision with appropriate reasoning. Managers provide their decision to ensure the success and sustainability of the business. . In quantitative approaches, managers are likely to get proper scientific procedure to analyze the cost, revenue, profit ratio, productivity ratio etc.

In castle nursing home Plc. with a branch of 200 unit management must have to use the quantitative approaches to ensure the proper utilization of resources, staff utilization, client administration etc.

2.3.2 The need for monitoring the business environment:

To identify the real threat or the opportunity the environment should be monitored. To rectify the environment business should have proper knowledge about all of the components of its. Monitoring business is a multiple step and not static but a moving process. steps. Environmental analysis comprises scanning, monitoring, analyzing, and forecasting the business situation. The whole process ensures the information that need for running the business. After the data collected it should be analyzed by monitoring the sequence. After that the proper forecasting process will suggest the future doing and the real scenario of the business. The aim of business monitoring is to ensure the achievement of business target by compromising regular activities.

2.3.3 The contribution of quantitative techniques to business functions:

The contribution of quantitative techniques to business functions can be seen by the today's business movement. Quantitative techniques ensure the logical framework building which allow the business to have scientific information.

It works by dealing with:



Data Mining

Time Analysis.

3.1: Assessing the future cash flow position of a business

A profitable business may shutdown due to cash, so the main agenda of any business is not generating profit, but to generate cash in time. It is hard to survive for a business without proper and positive cash flow.

3.1.1 Problems with forecasting future cash requirements

Cash Flow Statements, provides a proper viewpoint of flows of cash. Whereas a cash flow forecast is to predict the future movements of cash. So it has some certain limitations to work with: (Benedict, A. and Elliott, B:2008)

It is just a prediction- it might be wrong!

Based on historical data, might be absolute for the future aspects.

It just shows the movement of cash, did not mention the effect of any doings.

Produced by the internal employee, might be based on over confidence and not fully accurate.

3.1.2 Create and adjust cash budgets:


The importance of cash budget creating is inevitable. They are described below.

To predict the amount of money will need for a certain period.

To know the cost of organization is recoverable or not.

Adjusting Expectations:

Cash budget adjusting is required for several reasons

To analyze the sales administration and problem occupying with it.

Analyze the overall production process, specifically to check the viability against cost.

Comparing with actual figure and balance with long term objectives. (Benedict, A. and Elliott, B:2008)

3.1.3. Evaluate the impact of expected cash flows on management decision-making:

A cash flow statement mainly shows the inflow, from its income and outflow to operate its activities. Based on this management can take decision on the proper procedure to generate more cash and to stop the over out flow. The impact of expected cash flow on management decision making are described below:

The amount business investing in new camp and tactics for the process.

Operational movement to new plant or to invest another where.

3.2: Contribution of cost accounting techniques to decision-making

3.2.1 The financial implications of short run decisions by applying suitable costing techniques:

Suitable costing techniques can ensure the better costing of a product or a service. The cost accounting techniques are described below:

Absorption costing:

Reciprocal services

Absorption of overheads by product or service

Marginal costing:

Cost- Volume - Profit Analysis

Break-even analysis

Break-even charts.

Methods of calculating break-even point and other levels of activities.

Margin of safety and ascertainment of angle of incidence.

Profit volume ratio.

Activity Based Costing Technique:

Allocating cost driver.

3.3: Assessing the financial performance and stability of a business

3.3.1 The recent financial performance and stability of businesses by applying appropriate financial measures:

Financial measures indicate the way of the business movement. It analyzes the business in such a way that can provide the clearer picture of the business. The problem that business is facing with is clearly point out by the business. Such as- comparison between net profit and gross profit shows us the rate of indirect organizational expenditure. The net assets and gross assets also show us the currents status of the business assets. Inventory ratio also shows the movement of current assets in business. (Benedict, A. and Elliott, B:2008)

3.3.2 Discuss the extent to which analysis of published accounts can help to anticipate the future performance of a business:

Statement of financial position: Statement of financial position provides the information based on assets, liabilities. Ratio of assets and liabilities in a business indicate the overall position of the business.

Statement of Comprehensive Income: Provides a clearer scenario of business opeartions, Profit, Loss, Expenses, Sales etc.

Statement of retained earnings: explains the changes in a company's retained income over the treatment period.


Operations management ensures the better service or production of any business by developing a procedure of insights and skills. Proper Information is the main source of business planning in modern world's business. Without proper information the activities of whole business might be in a danger situation that hampers the business to reach the business strategy. However, the mainly vital implications starting these studies spirit are to recognize the elastic piece of the finance, information and operation management and the control in the decision making procedure plus the ability for citizens to expand their behavior in an improved and dependable environment.